U.S. ETFs saw record first-quarter flows, bringing in $296 billion during the first three months of 2025.
First-quarter 2025 flows topped the previous first-quarter record set in 2021, when U.S. ETFs attracted $248 billion. This places U.S. ETFs on track to garner $1.3 trillion for the full year, setting a full-year record, according to the latest U.S.-listed ETF Flash Flows report from State Street Global Advisors.
ETFs benefited from secular trends during the first quarter. The continued shift away from mutual funds, increased use of ETFs in models, rise of active ETF launches, and desire for low-cost products all played a role in ETF asset gathering, according to Matthew Bartolini, head of Americas ETF Research at SSGA.
It’s worth highlighting that low-cost exposures took in 50% ($148 billion) and active ETFs took in 40% ($120 billion) during the quarter. Two mutually exclusive categories taking in 90% of the first-quarter inflows underscores how strongly these two secular markets impact ETF asset growth, regardless of market movements, Bartolini said.
Active ETFs, currently on track for $480 billion in flows for the year, could potentially see inflows topping $500 billion in 2025. This is tremendous growth for the category that currently has roughly $1 trillion in assets.
Much of this growth in active ETFs is driven by fixed income offerings. Active fixed income ETFs are pacing toward $200 billion in net flows in 2025, which would be an 100% increase from their 2024 record, according to Bartolini.
ETFs Saw Strong Flows Despite Market Uncertainty
Notably, flows were strong during the first quarter despite a cloudy market outlook. Even as U.S. equities were challenged during the first quarter, equity ETFs took in sizable flows, both for the month and the quarter. However, fixed income ETFs saw greater flows as a percentage of their start-of-period assets, according to Bartolini.
"I confess I didn't come into 2025 expecting another year of record ETF demand after the massive flows we saw in 2024,” said Cinthia Murphy, investment strategist at VettaFi. “Markets are challenging this year. Uncertainty and jitters can make investors hesitant to put cash to work. And yet, here we are. It's been an incredible first quarter for usage and application of ETFs across portfolios. At this pace, we will probably blow last year's record out of the water."
Two buying behavior tactical trends emerged beneath the surface in March, according to Bartolini. Investors looked to position defensively to navigate the uncertain macro picture, as well as prepare for an environment where inflation may be more stubborn than previously thought.
"Diversification and defensive positioning have been big investment themes this year, and the data confirms the narrative,” Murphy explained. “Investors have turned to classic diversifiers such as gold and broad commodities as well as to international equities as we price in uncertainty and concerns of a U.S. economic slowdown. It could be that more clarity on the policy front becomes a catalyst for a change in these allocation trends. But until some of these clouds dissipate and we get better visibility, they are likely to stay in place."
Asset Class Drill-Down
Gold ETFs fit both buying behavior tactical trends, serving as a defensive play and inflation hedge. The ETF category took in $6.2 billion in flows in March, the fourth-highest ever, following February’s third-highest $6.6 billion, according to Bartolini.
Notably, the only other times where gold saw such strong inflows over the past 15 years were periods of severe economic calamity, Bartolini said, pointing to April 2020 and July 2020.
International ETFs were another area of focus for investors in the first quarter, with European ETFs accounting for 100% of the $6.2 billion into the international-region category. The was the second-highest flows on record for European ETFs, trailing only the $7.8 billion in March of 2015, according to Bartolini.
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